Editorial: Bringing the multitude of jobless out of the shadows

In the Silver State, unemployment has gone from more than 14 percent in late 2010 to 9.6 percent this past April.

This is one case, however, where the numbers do not tell the whole story, as highlighted in a recent story by RGJ business reporter Jason Hidalgo, who took at look at "shadow unemployment."

Shadow unemployment stepped to the forefront during the recession as the extended malaise saw many jobless U.S. workers drop out of the workforce - and not get counted in the official unemployment rate.

Once such groups are factored in, the unemployment rate becomes significantly higher.

Through the first quarter of 2013, for example, the annual unemployment rate nationwide was 7.9 percent, according to the U.S. Bureau of Labor Statistics. In contrast, the shadow unemployment rate was 14.5 percent during the same period.

Shadow unemployment numbers are especially staggering in Nevada, which consistently posted the highest jobless rate in the nation since the recession.

Though Northern Nevadans with jobs feel lucky to have them, it's important that the community not get complacent about improving jobless numbers. We now know that the real numbers are much higher.

That affects everyone through lower spending in the economy. The effects include a smaller tax base to pay for government services to help those in need. And revenue falls for private businesses that rely on consumer spending to drive future growth and job expansion.

McClatchy Newspapers this spring reported that Kevin Hassett, an economic adviser to the last three Republican presidential candidates, "labeled the stubbornly high rates of long-term unemployment a national emergency."

"Hassett, who's now a researcher at the free-market research center the American Enterprise Institute, cited research showing a drop of at least 40 percent in per capita income for people who've gone six months or longer without employment," the story said. "The longer a worker is jobless, the greater the chance of divorce, family strife, suicide and a host of other ills that do permanent damage to children, who'll become workers someday."

In the first quarter, Nevada's annual unemployment rate was 10.8 percent, which equates to more than 140,000 people. Labor statistics, however, peg shadow unemployment at 19.6 percent - more than a quarter-million Nevadans.

The good news for the state is that its economy and employment situation are improving. After peaking at 23.7 percent in the first quarter of 2011, shadow unemployment this year dipped below 20 percent for the first time since 2009.

Unemployment similarly was down to 9.6 percent in April, significantly below the 14.1 percent jobless peak posted in April 2011.

Real people are behind these numbers, as Hidalgo found.

After 26 years in construction, Debby Allee, 53, of Reno was laid off about a year and a half ago. In the past, Allee was never unemployed for more than a couple of weeks. This downturn, however, is proving to be quite different from those she's seen in the past.

"I've seen it this bad before but never for this long," Allee said. "My unemployment just ran out in January, and it's been tough having to live on my credit cards and using up every last bit of my savings.

"I don't have family here in Reno, so it'll be pretty brutal if something doesn't come up soon."

To show the extent of shadow unemployment, as well as the overall impact of the recession on Nevada's workforce and its various industries, Hidalgo analyzed data from Nevada and national sources. These included employment numbers for every industry in the state since 2006 and a decade's worth of national and state employment numbers from the U.S. Bureau of Labor Statistics.

"The high shadow unemployment rate is mostly due to folks who are working part-time but would rather be working full-time," said Bill Anderson, chief economist for the state employment agency. "If you're only looking at folks who gave up searching (for) work (and dropped out of the workforce) the difference from the official unemployment rate is actually just roughly a percentage point."

The situation is so bad for some that they are just giving up on seeking full-time jobs.

The Wall Street Journal recently reported on this, writing that a "dismal" government report on jobs showed U.S. labor force participation rates had fallen to the lowest levels since 1979.

"In past recessions, discouraged workers dropped out of the labor force but returned when the economy picked up steam," the Journal noted. "About two-thirds of Americans ages 16 and older were either working or looking for work at the start of the current recovery in 2009. But rather than expanding, the proportion of workers has since fallen to 63.3 percent."

In Reno, Len Stevens, executive director of The Chamber, touched on a similar theme in discussing how the most recent economic recovery differs from others.

"This recovery is unusual because I can talk to two different gas station owners, and one will say business is up 5 percent from last year and the other one is down, and I'm getting the same exact story from other businesses," Stevens said. "I think there's a general sense that we're finally seeing the light at the end of the tunnel, but a lot of business owners are waiting to see if this is just a bullet passing through or if it's going to materialize into an upswing."

Nevada's leaders in government and the private sector are working to lay the groundwork for a stronger economy through a variety of initiatives, but that's an effort that will take time to fully take hold.

Patience is not easy in these uncertain economic times. But that theme can change to a more confident one once a stronger recovery begins to take hold, bringing with it fulfilling full-time work for those who want it. We all benefit from that.

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Editorial: Bringing the multitude of jobless out of the shadows

On the surface, the jobs picture in Nevada looks to be improving.

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